UNIROYAL TECHNOLOGY CORPORATION
Suite 900
Two North Tamiami Trail
Sarasota, Florida 34236
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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The Annual Meeting of Stockholders of Uniroyal Technology Corporation
will be held at the Danbury Hilton & Towers, 18 Old Ridgebury Road, Danbury,
Connecticut, on March 16, 2001 at 10:00 a.m., Eastern Standard Time, for the
following purposes:
1. To elect seven directors for a term of one year;
2. to amend the Certificate of Incorporation to increase the
number of authorized shares of common stock;
3. to approve the adoption of the 2001 Stock Option Plan;
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4. to ratify the selection of Deloitte & Touche LLP to serve as
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the independent public accountants for the Company for the
fiscal year ending September 30, 2001; and
5. to transact such other business as may properly come before
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the meeting and any adjournment of the meeting.
The Board of Directors has fixed the close of business on January 17,
2001 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting. A complete list of stockholders entitled to vote
at the meeting will be available for examination by any stockholder for any
purpose germane to the meeting on and after March 6, 2001, during ordinary
business hours at the office of the Secretary of the Company, Two North Tamiami
Trail, Suite 900, Sarasota, Florida.
WHETHER OR NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IN THE UNITED STATES. PROMPT
RETURN OF THE PROXY WILL ASSURE A QUORUM AND SAVE THE COMPANY UNNECESSARY
EXPENSE.
OLIVER J. JANNEY
Secretary
Dated: January 29, 2001
UNIROYAL TECHNOLOGY CORPORATION
Suite 900
Two North Tamiami Trail
Sarasota, Florida 34236
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PROXY STATEMENT
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This proxy statement and the accompanying form of proxy are being
furnished to the stockholders of Uniroyal Technology Corporation, a Delaware
corporation (the "Company"), on or about January 30, 2001 in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held on March 16, 2001 at 10 a.m., Eastern
Standard Time, at the Danbury Hilton & Towers, 18 Old Ridgebury Road, Danbury,
Connecticut, and any adjournment thereof. Any stockholder who executes and
delivers a proxy may revoke it at any time prior to its use by (i) giving
written notice of revocation to the Secretary of the Company, (ii) executing a
proxy bearing a later date, or (iii) appearing at the meeting, giving notice of
revocation of the proxy and voting in person.
Unless otherwise specified, all shares represented by effective proxies
will be voted by the proxy holder in favor of (i) the seven nominees as
directors; (ii) amendment of the Certificate of Incorporation to increase the
number of authorized shares of common stock from 35,000,000 shares to
100,000,000 shares; (iii) approval of the 2001 Stock Option Plan; and
(iv) ratification of the selection of Deloitte & Touche LLP to serve as the
independent public accountants for the Company for the fiscal year ending
September 30, 2001. The Board of Directors does not know of any other business
to be brought before the meeting, but, as to any such other business,
proxies will be voted upon any such matters in accordance with the judgment of
the person or persons acting under the proxies.
The cost of soliciting proxies will be borne by the Company. The
Company has retained Mellon Investor Services, LLC to assist in the solicitation
of proxies for a fee of $9,500 plus reasonable out-of-pocket expenses. Original
solicitation of proxies by mail may be supplemented by telephone or telegram, by
personal solicitation by directors, officers or other regular employees of the
Company, who will not receive additional compensation for such services; the
cost of any such solicitation is expected to be nominal. Brokerage houses,
nominees, custodians and fiduciaries will be requested to forward soliciting
material to beneficial owners of stock held of record by them, and the Company,
upon request, will reimburse such persons for their reasonable out-of-pocket
expenses in doing so.
Only holders of record of outstanding shares of the Common Stock, $.01
par value per share ("Common Stock"), of the Company at the close of business on
January 17, 2001, are entitled to notice of, and to vote at the meeting. Each
stockholder is entitled to one vote for each share held on the record date.
There were 25,779,354 shares of Common Stock outstanding and entitled to vote
on January 17, 2001.
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When a quorum is present at the meeting, the vote of the holders of a
majority of the stock having voting power present in person or by proxy shall
decide the action proposed on each matter listed in the accompanying Notice of
Annual Meeting of Stockholders except the election of directors, who are elected
by a plurality of all votes cast, and the increase in the number of authorized
shares of Common Stock, which requires a vote of not less than three-quarters
of the outstanding capital stock of the Company. Abstentions and broker
"non-votes" will be counted as present in determining whether the quorum
requirement is satisfied. A "non-vote" generally occurs when a nominee holding
shares for a beneficial owner does not vote on a proposal because the nominee
has not received instructions as to such proposal from the beneficial owner and
does not have discretionary powers as to such proposal. The aggregate number of
votes entitled to be cast by all stockholders present in person or represented
by proxy at the meeting, whether those stockholders vote "For" or "Against" or
abstain from voting, will be counted for purposes of determining whether a
quorum is present. Abstentions from voting by stockholders and broker
"non-votes" are not counted for purposes of determining whether a proposal has
been approved.
On April 5, 2000, the Company paid a dividend of one share of Common
Stock for each share of Common Stock that was outstanding as of March 10, 2000.
The information set forth below in this Proxy Statement concerning shares of
Common Stock and exercise prices of stock options has been restated to reflect
the stock dividend.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of November 30, 2000, by (a) each person
known to the Company to be the beneficial owner of more than five percent of the
Common Stock, (b) all directors and nominees, (c) the Chief Executive Officer
and the other four most highly compensated executive officers of the Company and
(d) all directors and executive officers of the Company as a group:
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At November 30, 2000
Common Stock
Name and Address of Beneficial Owner /1 Number of Shares Owned /2 Percent of Class /3
- ------------------------------------- ---------------------- ----------------
Dr. Thomas J. Russell 3,578,410 14.06%
2 N. Tamiami Trail, Suite 1200
Sarasota, FL 34236
Enforcement Counsel for Superfund 1,740,936 6.84%
United States Environmental Protection Agency
401 M Street, N.W., Mail Code LE 134-5
Washington, D.C. 20460
Howard R. Curd 2,930,438 \4 11.10%
John A. Porter 1,578,948 \5 6.17%
Robert L. Soran 1,556,370 \6 5.86%
George J. Zulanas, Jr. 986,495 \7 3.80%
Oliver J. Janney 598,372 \8 2.32%
Roland H. Meyer 488,180 \9 1.91%
Richard D. Kimbel 247,430 \10 \11
Martin J. Gutfreund 241,179 \12 \11
Curtis L. Mack 137,516 \13 \11
Peter C.B. Bynoe 112,940 \14 \11
Thomas E. Constance 93,564 \15 \11
All directors and executive officers of the Company
as a group 8,934,290 \16 34.41%
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1\ The address for all directors and executive officers is c/o the Company,
Two North Tamiami Trail, Suite 900, Sarasota, Florida 34236.
2\ Information contained in the table reflects "beneficial ownership" as
defined in Rule 13d-3 under the Securities Exchange Act of 1934. This table is
based on information supplied by directors, officers and beneficial owners of
ten percent or more of the Common Stock, Forms 13D and 13G filed with the
Securities and Exchange Commission by beneficial owners of 5% or more of the
Common Stock and information published by the Nasdaq National Market. Unless
otherwise indicated, the stockholders identified in this table have sole voting
and investment power with respect to the shares beneficially owned by them.
3\ Applicable percentages are based on 25,444,859 shares of Common Stock
outstanding, plus, for each person or group, shares issuable pursuant to options
exercisable within 60 days under the Company's stock option plans and shares
issuable pursuant to outstanding warrants.
4\ Includes 814,616 shares of Common Stock issuable pursuant to
options exercisable within 60 days under the Company's stock option
plans, 152,600 shares of Common Stock issuable pursuant to warrants
and 36,050 shares of Common Stock in the Company's Savings Plan.
5\ Includes 141,438 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's 1992 Non-Qualified Stock Option
Plan and 1995 Non-Qualified Stock Option Plan.
6\ Includes 1,124,636 shares of Common Stock issuable pursuant to
options exercisable within 60 days under the Company's stock option
plans and 2,529 shares of Common Stock in the Company's Savings Plan.
Does not include 70,000 shares held by family members residing in Mr.
Soran's household, as to which Mr. Soran disclaims beneficial ownership.
7\ Includes 518,884 shares of Common Stock issuable pursuant to
currently exercisable options granted under the Company's stock option plans
and 7,275 shares of Common Stock in the Company's Savings Plan.
8\ Includes 370,844 shares of Common Stock issuable pursuant to
currently exercisable options granted under the Company's stock option plans
and 2,529 shares of Common Stock in the Company's Savings Plan.
9\ Includes 135,696 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock Option
Plan and 1995 Non-Qualified Stock Option Plan.
10\ Includes 109,552 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock and option plans and 1,592
shares of Common Stock in the Company's Savings Plan.
11\ Less than one percent.
12\ Includes 154,836 shares of Common Stock issuable pursuant to
currently exercisable options granted under the Company's stock option plans
and 30,743 shares of Common Stock in the Company's Savings Plan. Does not
include 16,600 shares held by members of Mr. Gutfreund's immediate family,
as to which Mr. Gutfreund disclaims beneficial ownership.
13\ Includes 128,916 shares of Common Stock issuable pursuant to
options exercisable within 60 days under the Company's 1992 Non-Qualified
Stock Option Plan and 1995 Non-Qualified Stock Option Plan.
14\ Includes 80,000 shares of Common Stock issuable pursuant to
options exercisable within 60 days under the Company's 1995 Non-Qualified
Stock Option Plan. 15Consists of Common Stock issuable pursuant to
options exercisable within 60 days under the Company's 1992 Non-Qualified
Stock Option Plan and 1995 Non-Qualified Stock Option Plan.
16\ Includes 3,672,982 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans and 80,718
shares of Common Stock in the Company's Savings Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes of ownership with the
Securities and Exchange Commission (the "S.E.C.") and the Nasdaq National
Market. Officers, directors and beneficial owners of more than ten percent of
the Common Stock are required by S.E.C. regulations to furnish the Company with
copies of all reports that they file with the S.E.C. pursuant to Section 16(a)
of the Exchange Act. Based solely on a review of the copies of such forms
furnished to the Company, the Company believes that during fiscal 2000 its
officers, directors and beneficial owners of more than ten percent of the Common
Stock complied with all applicable Section 16(a) filing requirements, except
that each of Messrs. Bynoe, Curd, Kimbel, Meyer, Porter and Soran filed late one
report of an exercise of stock options, and Mr. Soran filed late an Annual
Statement of Changes in Beneficial Ownership.
ELECTION OF DIRECTORS
Nominees for Director
NAME AGE POSITION DIRECTOR SINCE
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Peter C.B. Bynoe 49 Director 1992
Thomas E. Constance 64 Director 1998
Howard R. Curd 61 Chairman of the Board, Chief 1992
Executive Officer and Director
Curtis L. Mack 58 Director 1992
Roland H. Meyer 73 Director 1992
John A. Porter 57 Director 1994
Robert L. Soran 57 President, Chief Operating Officer 1993
and Director
Peter C.B. Bynoe is Chairman of the Audit Committee and a member of
the Executive Committee of the Board of Directors. Mr. Bynoe is Chairman of
Telemat Ltd., a project management and financial services consulting firm he
founded. He is also a partner in the law firm of Piper Marbury Rudnick &
Wolfe. Mr. Bynoe also formerly served as the Executive Director of the
Illinois Sports Facilities Authority, a joint venture of the City of Chicago
and the State of Illinois created to build a new Comiskey Park for the Chicago
White Sox. Mr. Bynoe is also a director of Blue Chip Broadcasting Co., which
owns approximately 17 radio stations in the Midwest. Mr. Bynoe was formerly
the co-owner and Managing General Partner of the National Basketball
Association's Denver Nuggets. Mr. Bynoe is also an Overseer of Harvard
University.
4
Thomas E. Constance is a member of the Compensation, Option,Trust Fund
and Executive Committees of the Board of Directors. Mr. Constance is Chairman
of Kramer, Levin, Naftalis & Frankel, a law firm in New York City. He was a
partner of Shea & Gould from 1971 to 1994 and served as Chairman of the
Executive Committee of that firm. Mr. Constance serves as a Trustee of the
M.D. Sass Foundation and St. Vincent's Services. He also serves on the
Advisory Boards of Barrington Capital, L.P. and Atwood Richards Inc. and serves
as a director of the Kroll-O'Gara Company.
Howard R. Curd was appointed Chief Executive Officer of the Company
as of September 21, 1992. Mr. Curd is also a member of the Executive Committee
of the Board of Directors. Mr. Curd is also a director of KeySpan Energy
Corporation and of Brothers Gourmet Coffees, Inc.
Curtis L. Mack is Chairman of the Trust Funds Committee and a member of
the Executive Committee of the Board of Directors. An attorney specializing in
labor law, Mr. Mack is a partner in the law firm of McGuire, Woods, Battle &
Boothe. Mr. Mack was formerly a partner in Mack, Haygood & McLean, a law firm
based in Atlanta, Georgia, from 1994 to 1999 and was before that a partner in
Mack & Bernstein, a law firm based in Atlanta, Georgia, from 1983 to 1994. Mr.
Mack taught labor and employment law at the University of Florida Law School in
1973-1974; he was General Counsel of the Florida Public Employees Relations
Commission from 1974 to 1975, and he was Chairman of the Commission from 1975 to
1976; from 1976 to 1981 he was Regional Director of the National Labor Relations
Board in Atlanta, Georgia. Presently Mr. Mack is an adjunct professor at the
University of Michigan Law School, and also serves on the Advisory Board to the
School of Social Science at Michigan State University. Mr. Mack has served as
Special Assistant Attorney General for the State of Georgia since 1989 and as
Chairman of the Human Relations Commission of the City of Atlanta since 1989.
Roland H. Meyer is Chairman of the Compensation Committee and the
Option Committee and a member of the Executive Committee of the Board of
Directors. Mr. Meyer was elected Vice Chairman of American National Can
Company, a leading manufacturer of metal, glass and plastic packaging products,
in 1987. He was elected Chief Operating Officer of American National Can in
1988 and President in 1989. Mr. Meyer served as President and Chief Operating
Officer of American National Can until his retirement in June 1992. Mr. Meyer
was a director of Allied Van Lines from 1987 to 1992 and was a director and
Vice Chairman of the Can Manufacturers Institute, Inc. from 1985 to 1994. Mr.
Meyer is currently a director of American National Can and is a member of
American National Can's Executive Committee. Mr. Meyer also served for
various periods as a director of certain subsidiaries of American National
Can. Mr. Meyer is also a director, Vice Chairman and Chairman of the
Executive Committee of First Commercial Bank of Tampa and a director of the
Catholic Education Foundation, Inc. of the Diocese of St. Petersburg, Florida.
John A. Porter is a member of the Audit and Executive Committees of
the Board of Directors. Mr. Porter is a director of Inktomi Corporation. Mr.
Porter was formerly a director of WorldCom Inc., one of the largest
telecommunications companies in the United States. He was Chairman of the
Board of Directors of LDDS Communications, Inc. ("LDDS") from 1988 until
5
its merger with Metromedia Communications in 1993 and was Vice Chairman of the
Board from 1993 to 1997. He served as President and Chief Executive Officer of
Telephone Management Corporation from 1987 until it was acquired by LDDS in
August 1988. Mr. Porter also serves as Chairman of the Board of Directors of
TelTek, Inc, a holding company that currently holds all of the stock of Gladwin,
Inc., an equipment manufacturer for deregulated electrical and
telecommunications markets, and Industrial Electric Manufacturing Inc. a
manufacturer of electrical power distribution products.
Robert L. Soran was elected President and Chief Operating Officer of
the Company as of September 21, 1992. Mr. Soran is also a member of the
Executive Committee of the Board of Directors. Mr. Soran was President and
Chief Executive Officer of Tropicana Products Inc., a fruit beverage processor
("Tropicana"), from 1986 until September 1991.
The Board of Directors held nine meetings during fiscal 2000. The
average attendance by directors at these meetings was over 75%, and all
incumbent nominees attended at least 75% of the Board and committee meetings
that they were scheduled to attend.
Among the committees of the Board of Directors are an Audit Committee,
a Compensation Committee, an Executive Committee, an Option Committee and a
Trust Funds Committee. The Board of Directors does not have a Nominating
Committee.
The Audit Committee recommends to the Board the selection of
independent accountants to audit the annual financial statements of the Company,
reviews the annual financial statements and meets with the Company's Chief
Financial Officer and independent accountants to review the scope and results of
the audit of the financial statements and other matters regarding the Company's
accounting, financial reporting and internal control systems. The Audit
Committee has also reviewed periodically the Company's management of Year 2000
issues. During fiscal 2000 the Audit Committee met seven times. The members of
the committee are Messrs. Bynoe (Chairman), Porter and Richard D. Kimbel. The
Audit Committee consists of independent directors, except Mr. Kimbel, who was
employed by the Company as a consultant. During fiscal 2000 the Board of
Directors adopted a charter for the Audit Committee. The charter is set forth in
Exhibit A at the end of this Proxy Statement.
The Compensation Committee reviews management's recommendations with
respect to salary and incentive compensation of executive officers and other key
employees, as well as the Company's benefit plans and arrangements other than
Stock Option Plans, and makes recommendations to the Board with respect to such
plans. During fiscal 2000 the Compensation Committee met five times. The members
of the Compensation Committee are Messrs. Meyer (Chairman), Constance and
Richard D. Kimbel.
The Option Committee administers all of the stock option plans of the
Company and the 2000 Stock Plan. The members of the Option Committee are Messrs.
Meyer (Chairman) and Constance. The Option Committee met four times
during fiscal 2000.
The Trust Funds Committee reviews the Company's handling of trust
funds under its employee benefits plans. During fiscal 2000 the Trust Funds
6
Committee met once. The members of the Trust Funds Committee are Messrs. Mack
(Chairman), Constance and Richard D. Kimbel.
Compensation of Directors
Each director who is not an officer of the Company receives an annual
fee (the "Annual Retainer Fee") of $25,000, plus $1,000 for each meeting of the
Board of Directors attended, $2,500 per annum for service on a committee (except
the chairman of a committee, who receives $3,000 per annum) (the "Committee
Retainer Fees") and $500 to $1,000 for each committee meeting attended,
depending upon whether the committee meeting is held in conjunction with a
meeting of the Board of Directors, independent of a meeting of the Board of
Directors or by teleconference. Each director receives reimbursement of his
expenses incurred in attending each meeting of the Board of Directors or of a
committee. In addition, each director who was not an officer of the Company was
paid a bonus of $50,000 in fiscal 2000 in respect of the successful sale of the
assets of the Company's subsidiary, High Performance Plastics, Inc.
Directors who are not officers of the Company may elect to apply up to
the entire amount of their Annual Retainer Fees and Committee Retainer Fees in
exchange for options to purchase Common Stock pursuant to the 1992 Non-Qualified
Stock Option Plan (the "1992 Non-Qualified Plan"). The 1992 Non-Qualified Plan
provides that Common Stock underlying each option issued pursuant to such Plan
may be purchased for 100% of the market price of the Common Stock on the date of
grant. Although the amount of the Annual Retainer Fee and Committee Retainer
Fees is initially paid for the option, such amount also constitutes 50% of the
consideration payable for the underlying Common Stock. When the Director
exercises the option, the additional 50% of the purchase price of the Common
Stock must be paid in cash by the Director. If the Director does not timely
exercise the option to purchase the Common Stock, the Annual Retainer Fee and
Committee Retainer Fees applied to acquire the option will be forfeited by the
Director. In addition, each director of the Company has received options to
purchase shares of Common Stock under the 1995 Non-Qualified Stock Option Plan.
No director who is not an officer of the Company may receive options to purchase
more than an aggregate of 60,000 shares of Common Stock in any calendar year
under all of the Company's stock option plans.
Compensation Committee Interlocks and Insider Participation
Mr. Kimbel, who has served as a member of the Compensation Committee,
was employed by the Company and certain of its predecessor companies from 1962
through December 2000. Mr. Kimbel was employed as an engineer by certain of such
predecessor companies and the Company from 1962 until June 1994, when he became
Manager of Human Resources for the Ensolite and Uniroyal Adhesives and Sealants
divisions of the Company; he was a consultant to the Company on special projects
until December 31, 2000.
No executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
7
Executive Officers of the Company
Officers of the Company are appointed to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders or until
their respective successors have been duly elected and qualified. Any officer of
the Company may be removed, pursuant to the Company's By-Laws, with or without
cause, by a vote of a majority of the entire Board of Directors. The following
table sets forth the name, age and position of each executive officer of the
Company:
NAME AGE POSITION
=============================================== ===================== ================================================
Howard R. Curd 61 Chairman of the Board of Directors and
Chief Executive Officer
Robert L. Soran 57 Director, President and Chief Operating
Officer
George J. Zulanas, Jr. 56 Executive Vice President, Chief Financial
Officer and Treasurer
Oliver J. Janney 54 Executive Vice President, General Counsel
and Secretary
Martin J. Gutfreund 59 Vice President, Human Resources and
Administration
The business experience of Messrs. Curd and Soran is described above
under "Election of Directors - Nominees for Director".
Messrs. Zulanas, Janney and Gutfreund were elected to the positions set
forth above as of September 21, 1992, except that Messrs. Zulanas and Janney
were elected to the office of Executive Vice President on March 10, 2000.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee and the Option Committee
Roles of the Compensation and Options Committees
As was earlier described in the section on committees of the Board of
Directors, the Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company, and the Option
Committee administers the Company's stock option programs and the 2000 Stock
Plan.
Compensation Philosophy
The Company's compensation philosophy with respect to the compensation
of the Company's executive officers consists of the following core principles:
8
o Base salary should be competitive in order to attract, retain and
motivate well-qualified executives.
o Incentive compensation should be directly related to achieving
specified levels of corporate financial performance. A significant
part of the executive officers' compensation should be at risk,
based upon the success of the Company.
o Long-term stock ownership of the Company's Common Stock by the
Company's executive officers creates a valuable link between the
Company's management and stockholders. Stock ownership gives
management strong incentives to properly balance the need for
short-term profits with long-term goals and objectives and to
develop strategies that build and sustain stockholder returns.
Executive Compensation Program
The Company's executive compensation program contains three components
which are intended to reflect the Company's compensation philosophy.
Base Salary. Base salary and adjustments to base salary are set by
employment agreements with Messrs. Curd, Soran, Zulanas and Janney. The base
salaries for executive officers are targeted at the upper quartiles of the
competitive market. For this purpose, the Compensation Committee reviews and
considers the salary ranges of executive officers in comparable positions at
companies comparable to the Company in various industries. The Compensation
Committee's practice is to review the base salary of each executive officer
annually, at which time the executive officer's base salary may be increased
beyond the contractually mandated incremental increases based upon the executive
officer's individual performance and contributions to the Company. The Committee
has not made any such increase in the past.
Annual Bonus. The Company's executive officers, as well as a number of
other key employees of the Company, are eligible for an annual cash bonus
pursuant to the Company's Management Incentive Plan (the "MIP"). Target annual
bonus amounts for the executive officers are established at the beginning of the
fiscal year by the Compensation Committee. For this purpose, the Compensation
Committee reviews and considers bonus amounts awarded to officers of companies
in comparable positions in various industries comparable in size to the Company
and also considers Company performance and the achievement of each executive
officer in his area of responsibility and the resulting contribution to overall
corporate performance. Total payments into the MIP Plan for all participants,
including executive officers, were approximately $1,948,000 for fiscal 1998,
approximately $1,955,000 for fiscal 1999, and approximately $2,365,591 for
fiscal 2000. Under the MIP the Compensation Committee has discretion to adjust
an individual's actual bonus payment from the amount that would otherwise be
payable under the formula, subject to approval by the full Board of Directors.
Long-Term Incentives. The executive officers of the Company and 78
other current members of management and other key employees have been granted
and currently hold stock options pursuant to the Company's stock option plans.
The Company's stock option plans are intended to provide opportunities for stock
ownership by management and other key employees, which will increase their
proprietary interest in the Company and, consequently, their identification with
the interests of the stockholders of the Company. In addition, the executive
officers have purchased stock on their own as a demonstration of their
commitment to the Company. Stock options granted under the 1992 and 1994 Stock
Option Plans have exercise prices equal to the fair market value of the
Company's Common Stock on the dates of grant. The
9
stock options have a ten-year term, except certain stock options granted for
three-year terms. A deferred compensation plan was instituted for the executive
officers in fiscal 1995; this improves the Company's short-term cash flow. A
split-dollar life insurance plan was also instituted, to facilitate executive
officers' saving for retirement; this plan was revised in March 2000, so that
each participant may purchase for a nominal sum the paid-up policy at retirement
or such earlier date on which benefits would be payable. At the same time the
Board of Directors amended the Deferred Compensation Plan to reduce the rate of
interest paid by the Company on balances held under the plan. Effective October
1, 1998, the Board of Directors approved a defined contribution retirement plan
to provide benefits for certain executives for ten years after their retirement;
benefits under such plan are conditional on an executive's being employed by the
Company until retirement; in March 2000 the Board of Directors approved an
additional ten years of paid-up benefits. On March 10, 2000, the stockholders
approved a stock grant plan for directors and key employees, including the
executive officers; no grants were made under the plan in fiscal 2000.
Commissions. In 1996 the Board of Directors directed management of the
Company to deploy a significant portion of the assets of the Company from mature
businesses to high technology businesses. In March 2000 the Board of Directors
determined that the actions of the Chief Executive Officer, the President and
the Chief Financial Officer in consummating the sale of the assets of High
Performance Plastics, Inc. on terms highly favorable to the Company had
accelerated the achievement of the goals set by the Board of Directors. In the
spring of 2000, the Board of Directors took a number of actions to reward such
officers for the sale of the High Performance Plastics business, including
payment of commissions in the form of cash and funding of supplemental
retirement benefits. The total commissions involved an expenditure of
$3,677,489, after provisions for income tax benefits.
Internal Revenue Code Section 162(m). Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") generally disallows a tax
deduction to publicly held companies for compensation to the chief executive
officer and the four other most highly compensated executive officers to the
extent that it exceeds $1 million per covered officer in any fiscal year.
Certain exceptions are provided for non-discretionary, performance-related
compensation.
The Company's stock option plans have been structured so that any
compensation deemed paid in connection with the exercise of options granted
under such plans will qualify as performance-based compensation. The
Compensation Committee will review the effects of Section 162(m), from time to
time, as it reviews changes in the compensation arrangements, to the extent it
deems appropriate. The Compensation Committee may recommend payments that are
not deductible when it considers them in the best interests of the Company and
its stockholders.
Chief Executive Officer's Performance
The Compensation Committee has reviewed the compensation of the Chief
Executive Officer and has found the level appropriate in comparison with persons
holding similar positions in comparable companies and in light of
extraordinarily favorable developments at the Company during fiscal 2000,
including the following: increase in the Company's sales by ongoing
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operations by 16 percent, continuation of the acquisition program to increase
earnings and broaden the product mix and the capital expenditure program to
provide additional opportunities for the Company, disposition of the assets of
the High Performance Plastics business on highly favorable terms, reducing the
Company's debt to equity ratio from 2.47 to 0.78 and increasing the visibility
of the Company's common stock in the market. All of these developments have
contributed to an increase in the price of the Company's stock by 204% during
the 2000 fiscal year. $1,633,100 million of the cash commissions described above
was paid to or on behalf of the chief executive officer to reward the
extraordinary benefits that he realized for the Company in the sale of the High
Performance Plastics business. The Compensation Committee believes that the
Chief Executive Officer is being appropriately compensated in a manner that
relates to the performance of the Company.
Compensation Committee Option Committee
------------------------------- -----------------------------------
ROLAND H. MEYER, CHAIRMAN ROLAND H. MEYER, CHAIRMAN
THOMAS E. CONSTANCE THOMAS E. CONSTANCE
RICHARD D. KIMBEL
11
Summary Compensation Table
The following table sets forth the cash and other compensation paid by
the Company in respect of the fiscal year ended October 1, 2000, to the Chief
Executive Officer and the other four most highly compensated officers of the
Company. Certain of the executive officers of the Company also received certain
other compensation, including automobile allowances. The amount of such other
compensation received by each of these officers was less than the lesser of
$50,000 or 10% of his respective cash compensation as set forth in the Salary
and Bonus columns of this table.
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION
Other Securities
Name and Principal Position Fiscal Year Salary Bonus Annual Compensation Underlying Options
($) ($) ($) (#)
==================================== =============== =============== ============= ==================== ==================
Howard R. Curd 2000 571,939 400,357 1,637,039 \17 773,106
Chairman of the Board & Chief 1999 559,373 500,000 9,639 17,500
Executive Officer 1998 550,262 500,000 6,461 184,053
Robert L. Soran 2000 470,364 329,255 1,308,119 \18 701,484
President & Chief 1999 460,030 400,000 5,205 17,500
Operating Officer 1998 452,219 350,000 3,488 168,242
George J. Zulanas, Jr. 2000 244,625 171,237 740,145 \19 394,864
Executive Vice President, Chief 1999 232,936 180,000 4,279 0
Financial Officer & Treasurer 1998 228,971 180,000 2,868 97,432
Oliver J. Janney 2000 239,121 517,385 330,709 \20 343,242
Executive Vice President, 1999 227,686 175,000 2,945 0
General Counsel & Secretary 1998 223,977 175,000 1,974 81,621
Martin J. Gutfreund 2000 139,030 194,642 453,570 \21 65,000
Vice President, 1999 135,976 95,014 3,012 0
Human Resources and 1998 145,409 95,014 2,088 12,500
Administration
==================================== =============== ================== ========= ================ ===========
- --------
17\ Includes commission of $1,633,100.
18\ Includes commission of $1,305,992.
19\ Includes commission of $738,397.
20\ Includes funding of supplemental retirement benefits in the amount of $329,505.
21\ Includes funding of supplemental retirement benefits in the amount of $452,345.
12
Compensation Pursuant to Other Programs; Stock Option Plan
In addition to the salary administration program and MIP, in order to
retain and attract quality management, the Company maintains a compensation
program that includes stock option plans, a stock grant plan and benefit
programs such as disability and health insurance and death benefits. Stock
options for key employees are granted by the Option Committee, and the
Compensation Committee reviews the other benefit programs. The Option Committee
has delegated to the Vice President, Human Resources and Administration the
authority to grant limited stock options to key employees other than executive
officers following written approval by the Chief Executive Officer and the Chief
Operating Officer of the Company, acting as a subcommittee of the Board of
Directors.
The options granted in the last fiscal year to the Chief Executive
Officer and the four most highly compensated executive officers of the Company
other than the Chief Executive Officer are set forth in the following table:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise Price
Options Employees in ($/Share) Expiration 5% 10%
Name Granted Fiscal Year Date ($) ($)
========================= ============ ============== ================ ================= ============ ===============
Howard R. Curd 358,106 12% 4.50 10/25/09 1,013,449 2,568,279
35,000 1% 23.0625 04/09/03 127,233 267,179
380,000 13% 17.25 04/03/10 4,122,404 10,446,982
Robert L. Soran 326,484 11% 4.50 10/25/09 923,958 2,341,491
35,000 1% 23.0625 04/09/03 127,233 267,179
340,000 11% 17.25 04/03/10 3,688,467 9,347,300
George J. Zulanas, Jr. 194,864 6% 4.50 10/25/09 551,470 1,397,534
200,000 7% 17.25 04/03/10 2,169,686 5,498,411
Oliver J. Janney 163,242 5% 4.50 10/25/09 461,979 1,170,746
180,000 6% 17.25 04/03/10 1,952,718 4,948,570
Martin J. Gutfreund 25,000 1% 4.50 10/25/09 70,751 179,296
40,000 1% 17.25 04/03/10 433,937 1,099,682
======================= ================== ========== =============== ================= ============= ===============
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR END OPTION VALUES
Shares
Acquired in Number of Securities Value of Unexercised In-
Exercise (#) Value Underlying Unexercised the-Money Options at
Realized Options at October 1, October 1, 2000 \22
($) 2000 ($)
============================= =============== ================ ============================ ============================
Name Exercisable/ Exercisable/
Unexercisable Unexercisable
============================= =============== ================ ============================ ============================
Howard R. Curd 185,840 961,396 321,266/916,350 3,520,605/5,219,411
Robert L. Soran 197,882 1,085,509 675,558/832,078 8,264,009/4,758,508
George J. Zulanas, Jr. 192,592 1,044,977 289,074/472,810 3,490,963/2,840,147
Oliver J. Janney 37,906 300,864 229,824/408,540 2,628,904/2,379,264
Martin J. Gutfreund 0 0 151,362/75,000 1,959,921/364,375
============================= =============== ================ ============================ ============================
CERTAIN TRANSACTIONS
Transactions with Directors
Thomas E. Constance, a director of the Company, is Chairman of the law
firm of Kramer, Levin, Naftalis & Frankel, which performed legal services for
the Company during fiscal 2000. Peter C. B. Bynoe, a director of the Company, is
a partner of the law firm of Piper Marbury Rudnick & Wolfe, which performed
legal services for the Company during fiscal 2000.
Agreements with Executives
Mr. Curd, Chairman of the Board and Chief Executive Officer of the
Company, is employed pursuant to an agreement which was amended and restated as
of April 25, 1995. The agreement provides for a base salary of $480,300. Mr.
Curd's base salary is subject to adjustment annually during the term of the
agreement based on changes in the U.S. Consumer Price Index for all Urban
Consumers, U.S. City Average (the "CPI"). Pursuant to this provision, Mr. Curd's
base salary was increased by 3.66% effective September 1, 2000. Mr. Curd is also
entitled to receive a bonus pursuant to the MIP at the end of each fiscal year.
Mr. Curd's employment agreement provides for a three-year base term subject to
automatic one-year extensions on each anniversary date of the agreement unless
such agreement is terminated by either party. In addition, Mr. Curd is entitled
to receive the base salary that he would have received for the balance of the
term of the agreement plus an amount equal to two years' salary as severance
upon termination of his employment by the Company.
- --------
22\ The values are based on the closing price of the Common Stock on the
Nasdaq National Market on September 29, 2000, which was $15.00 per share.
14
Mr. Soran, President and Chief Operating Officer of the Company, is
employed pursuant to an agreement which was amended and restated as of April 25,
1995. The agreement is for a two-year term subject to automatic annual one-year
extensions on each anniversary date of the agreement unless such agreement is
terminated by either party. Mr. Soran's employment agreement provides for a base
salary of $395,000. Mr. Soran's base salary is subject to adjustment annually
during the term of the agreement based on changes in the CPI. Pursuant to this
provision, Mr. Soran's base salary was increased by 3.66%, effective September
1, 2000. Mr. Soran is also entitled to receive a bonus pursuant to the MIP at
the end of each fiscal year, as determined by the Board of Directors. In
addition, Mr. Soran is entitled to receive the base salary that he would have
received for the balance of the term of the agreement plus an amount equal to
one year's salary as severance upon termination of his employment by the
Company.
Mr. Zulanas, Executive Vice President, Treasurer and Chief Financial
Officer of the Company, is employed pursuant to an agreement which was amended
and restated as of April 25, 1995. The agreement is for a two-year term subject
to annual one-year automatic extensions on each anniversary date of the
agreement unless such agreement is terminated by either party. Mr. Zulanas'
employment agreement provides for a base salary of $200,000. Mr. Zulanas' base
salary is subject to adjustment annually during the term of the agreement based
on changes in the CPI. Pursuant to this provision, Mr. Zulanas' base salary was
increased by 3.66%, effective September 1, 2000. Mr. Zulanas is also entitled to
receive a bonus pursuant to the MIP at the end of each fiscal year, as
determined by the Board of Directors. In addition, Mr. Zulanas is entitled to
receive the base salary that he would have received for the balance of the term
of the agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company.
Mr. Janney, Executive Vice President, Secretary and General Counsel of
the Company, is employed pursuant to an agreement which was amended and restated
as of April 25, 1995. The agreement provides for a base salary of $195,500. Mr.
Janney's base salary is subject to adjustment annually during the term of the
agreement based on changes in the CPI. Pursuant to this provision, Mr. Janney's
base salary was increased by 3.66%, effective September 1, 2000. Mr. Janney is
also entitled to receive a bonus pursuant to the MIP at the end of each fiscal
year. Mr. Janney's employment agreement provides for a two-year base term
subject to automatic one-year extensions on each anniversary date of the
agreement unless such agreement is terminated by either party. In addition, Mr.
Janney is entitled to receive his base salary for the balance of the term of the
agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company.
15
STOCK PERFORMANCE GRAPH
The following graph is a comparison of the five-year cumulative total
return among the Company, the Standard & Poor's 500 Composite Index and the
Standard & Poor's Chemical Index.
TOTAL SHAREHOLDER RETURNS
ANNUAL RETURN PERCENTAGE
Years Ending
=============================== =========================================================================================
Company/Index Sept. 96 Sept. 97 Sept. 98 Sept. 99 Sept. 00
=============================== ================== ================ ================ =============== =================
Uniroyal Technology -21.90 40.02 100.04 5.41 207.69
Corporation
S&P 500 Index 20.33 40.45 9.05 27.80 13.28
Chemicals (Specialty) - 500 7.74 12.97 -21.36 21.10 -21.59
Base INDEXED RETURNS
Period Years Ending
============================= =============================================================================
Company/Index Sept.95 Sept.96 Sept.97 Sept.98 Sept.99 Sept.00
============================= =============== ============== ============== ============== =============== ==============
Uniroyal
Technology Corporation 100 78.10 115.60 231.25 243.75 750.00
S&P 500 Index 100 120.33 169.00 184.29 235.53 266.82
Chemicals (Specialty) - 500 100 107.74 121.72 95.72 115.92 90.90
Source: Standard & Poor's Compustat
This comparison of five-year cumulative returns assumes that $100
was invested on October 1, 1995, in Common Stock, the S&P 500
Composite Index and the S&P Chemicals (Specialty) Index. No dividends were paid
on the Common Stock.
REPORT OF THE AUDIT COMMITTEE
In accordance with the written charter adopted by the Board of
Directors (the "Board"), the Audit Committee of the Board
assists the Board in fulfilling its responsibility for oversight of
the quality and integrity of the accounting, auditing and financial
16
reporting practices of the Company. During fiscal 2000 the
Committee met seven times and discussed, among other things,
the interim financial information contained in each quarterly
earnings announcement with the Chief Financial Officer of the
Company and representatives of the independent auditors prior
to public release.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the independent
auditors a formal written statement describing all relationships
between the auditors and the Company that might bear on the
auditors' independence consistent with Independence Standards
Board Standard Number 1, "Independence Discussions with Audit
Committees", and the auditors' judgement that they are,
in fact, independent and discussed with the auditors the
disclosures therein. The Committee also discussed with
management and the independent auditors the quality and
adequacy of the Company's internal controls. The Committee
reviewed with the independent auditors their audit plans, audit
scope, and identification of audit risks.
The Committee discussed and reviewed with the independent
auditors all communications required by generally accepted
auditing standards, including those described in Statement on
Auditing Standards Number 61, as amended, "Communication with
Audit Committees", and, with and without management
present, discussed and reviewed the results of the independent
auditors' examination of the financial statements.
The Committee reviewed the audited financial statements of the
Company as of and for the fiscal year ended October 1, 2000,
with management and the independent auditors. Management
has the responsibility for the preparation of the Company's
financial statements, and the independent auditors have the
responsibility for the examination of those statements. The
Committee's job is one of oversight. As noted in the
Committee's charter, the Committee and the Board recognize
that management and the independent auditors have more
resources and time, and more detailed knowledge and
information regarding the Company's accounting, financial and
auditing practices than the Committee does; accordingly the
Committee's oversight role does not provide any expert or special
assurance as to the Company's financial statements.
Based on the above-mentioned review and discussions with
management and the independent auditors, the Committee
recommended to the Board that the Company's audited financial
17
statements be included in its Annual Report on Form 10-K for the
fiscal year ended October 1, 2000, for filing with the
Securities and Exchange Commission. The Committee also
recommended the reappointment, subject to shareholder
approval, of the independent auditors, Deloitte & Touche, LLP, and
the Board concurred in such recommendation.
PETER C. B. BYNOE, CHAIRMAN
RICHARD D. KIMBEL
JOHN A. PORTER
Text Moved Here: 1
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
Proposed Amendment
The Board of Directors on November 30, 2000 adopted a
resolution approving the amendment of the Company's
Certificate of Incorporation to increase the authorized shares of
Common Stock from 35,000,000 shares to 100,000,000
shares and directing that the proposed amendment be submitted
to a vote of the stockholders at the Annual Meeting. The Board
of Directors determined that the amendment is in the best
interests of the Company and unanimously recommends
approval by the stockholders. If the amendment is approved by
the stockholders, the Company will file an Amended and
Restated Certificate of Incorporation with the Secretary of State of
Delaware reflecting the amendment, which will become
effective on the date the Amended and Restated Certificate of
Incorporation is accepted for filing by the Secretary of State of
Delaware.
Assuming the presence of a quorum, the Company's
Certificate of Incorporation requires that, for approval of the
amendment, the votes cast in favor of the amendment must be
at least three-quarters of the shares of capital stock entitled to
vote on the proposal. The Board of Directors recommends that
stockholders vote for this proposal.
Background and Reasons for the Proposed Amendment
18
The Articles of Incorporation presently authorize the
issuance of up to 35,000,000 shares of Common Stock and
1,000 shares of Preferred Stock. No shares of Preferred Stock
are issued and outstanding. 475 shares of Series C Preferred
Stock have been reserved for the Company's Shareholders
Rights Plan. Of the 35,000,000 shares of Common Stock
authorized, as of the close of business on November 30, 2000,
there were 25,444,859 shares issued and outstanding and
6, 942,956 shares reserved for future issuance. Of
= =======
the shares then reserved for future issuance, (i) 735,770 shares
were reserved for issuance pursuant to outstanding warrants;
(ii) 857,186 shares were reserved for issuance pursuant to
outstanding options granted to directors under the Company's
1992 Non-Qualified and 1995 Non-Qualified Stock Option Plans;
(iii) 5,250,000 shares were reserved
for issuance under the Company's 1992 and 1994 Stock
Option Plans; and (iv) 100,000 shares were reserved for
issuance under the Company's 2000 Stock Plan.
After deducting outstanding and reserved shares, of the
35,000,000 shares of Common Stock presently authorized
there are 2,612, 815 authorized shares that have not
===== ===
been issued and are not reserved for a specific purpose. The
Board of Directors believes that it is in the Company's best
interests to increase the number of authorized shares of
Common Stock to make additional shares available for issuance
to meet the Company's future business needs.
The Company's management has no present arrangements,
agreements, understandings or plans for the issuance or use of
the additional shares of Common Stock proposed to be
authorized by the amendment. The Board of Directors believes
that the availability of such shares will benefit the Company by
providing flexibility to issue stock for a variety of proper
corporate purposes as the Board of Directors may deem
advisable without further action by the Company's
stockholders, except as may be required by law, regulation or
Nasdaq National Market System rule. These purposes could
include, among other things, the sale of stock to obtain
additional capital funds, the purchase of property, the
acquisition or merger into the Company of other companies, the
use of additional shares for various equity compensation and
other employee benefit plans, the declaration of stock dividends
or distributions and other bona fide corporate purposes. Were
any of these situations to arise, the issuance of additional
shares of stock could have a dilutive effect on earnings per
share, and, for a person who does not purchase additional
19
shares, to maintain his, her or its pro rata interest, on a
stockholder's percentage voting power in the Company.
Holders of the Common Stock do not have preemptive rights to
subscribe to additional securities that may be issued by the
Company, which means that current stockholders do not have a
prior right to purchase any new issue of stock of the Company in
order to maintain their proportionate ownership interest.
Although an increase in the authorized shares of Common Stock
could, under certain circumstances, have an anti-takeover effect
(for example, by diluting the stock ownership of a person
seeking to effect a change in the composition of the Board of
Directors or contemplating a tender offer or other transaction
directed to the combination of the Company with another
company), the current proposal to amend the Certificate of
Incorporation is not in response to any effort to accumulate the
Company's stock or to obtain control of the Company by means
of a merger, tender offer, solicitation in opposition to
management or otherwise. As of the date of this Proxy
Statement, management is not aware of any actions taken by
any person or group to obtain control of the Company. In
addition, the proposal is not part of any plan by management to
recommend a series of similar amendments to the Board of
Directors and the stockholders.
Existing Antitakeover Provisions
Although the purpose of seeking an increase in the number
of authorized shares of Common Stock is not intended for anti-
takeover purposes, the rules of the Securities and Exchange
Commission require disclosure of the provisions of the
Certificate of Incorporation and the Company's By-Laws that
could have an anti-takeover effect. These provisions are
described below.
Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws contain provisions that may have the
effect of delaying, deterring or preventing a change in control of
the Company, including: (i) the ability of the Board of Directors
under the Certificate of Incorporation to authorize the issuance
of shares of preferred stock, in one or more series, having such
preferences, limitations and relative rights as are determined by the
Board of Directors; and (ii) the requirement under the By- Laws
that a shareholder who wishes to nominate directors at an
annual or special meeting or submit a proposal for consideration
at an annual meeting must provide notice to the Company
20
during a certain period prior to the meeting.
Shareholder Rights Plan. On December 18, 1996, the Board of
Directors declared a dividend distribution of one preferred share
purchase right (a "Right") for each share of the Common Stock,
outstanding as of December 30, 1996. Each Right entitles the
holder to purchase from the Company 1/100,000 of a share of
participating preferred stock of the Company for $17.00,
subject to adjustment. Initially, the Rights are attached to the
Common Stock and are not represented by separate certificates
or exercisable until the earlier to occur of (i) ten days after the
public announcement (the date of such first public
announcement being the "Stock Acquisition Date") that a
person or group has acquired 15% or more of the Common
Stock (other than the existing 15% owners who do not increase
their ownership), or (ii) ten business days (or such later date as
may be determined by the Board) after the commencement of a
tender or exchange offer that would result in an Acquiring
Person owning 15% or more of the Common Stock, the earlier
of such dates being the "Distribution Date". If after the
Distribution Date a person shall become an Acquiring Person (other
than pursuant to certain offers approved by the Board),
each holder of a Right (other than the Acquiring Person and, in
certain circumstances, the Acquiring Persons's transferees) will
have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the purchase price
of the Right. In addition, if after a Stock Acquisition Date the
Company enters into certain business combinations, or 50% or more
of the Company's assets or earning power is sold or
transferred, each holder of a Right shall have the right to
receive, upon exercise, common stock of the acquiring company
having a value equal to two times the purchase price of the
Right. The Board may, subject to certain limitations, amend the
Rights and may redeem all but not less than all of the Rights for
$0.001 per Right. The Rights have certain anti-takeover effects.
The Rights will expire on December 18, 2006 unless earlier redeemed.
The Rights could cause substantial dilution to a person that
attempts to acquire the Company without the approval of the
Board unless the offer is conditioned on a substantial number of
Rights being acquired or on redemption of the Rights. The
Rights, however, should not affect offers for all outstanding
shares of Common Stock at a fair price and otherwise in the
best interests of the Company and its stockholders as
determined by the Board.
21
Stock Option Plans. The Company's stock option plans
------------------
provide that, in the event of a change in control of the
Company, options granted under the plans to the extent not
previously vested and exercisable, will be deemed fully vested
and exercisable effective immediately.
End Of Moved Text
APPROVAL AND ADOPTION OF THE 2001 STOCK OPTION
PLAN
On January 26, 2001, the Board of Directors adopted the
=======================================================
Uniroyal Technology Corporation 2001 Stock Option Plan (the "2001 Plan") in the
===============================================================================
form attached hereto as Exhibit B. The following discussion is qualified by the
===============================================================================
2001 Plan attached hereto as Exhibit B. The purpose of the 2001 Plan is to
===============================================================================
afford certain key persons who are responsible for the continued growth of the
===============================================================================
Company an opportunity to acquire a proprietary interest in the Company and
===============================================================================
thus to create in such persons an increased interest in and a greater concern
===============================================================================
for the welfare of the Company. The 2001 Plan provides for grants of options
===============================================================================
during a ten-year period. The maximum number of Shares that may be purchased
===============================================================================
pursuant to the exercise of options granted under the 2001 Plan in the
===============================================================================
aggregate is 5,000,000 shares of Common Stock, and no individual may receive
===============================================================================
grants in any single fiscal year that exceed 500,000 shares in the aggregate.
===============================================================================
Shares to be acquired under the 2001 Plan may be either authorized but unissued
===============================================================================
shares, shares of issued stock held in the Company's treasury or both, at the
===============================================================================
discretion of the Company. If and to the extent that options granted under
===============================================================================
the 2001 Plan expire or terminate as to new grants without having been
===============================================================================
exercised, the Shares covered by such expired or terminated options may again
===============================================================================
be subject to an option under the 2001 Plan. The 2001 Plan will become
===============================================================================
effective on its approval by the stockholders and will terminate as to new
===============================================================================
grants on January 25, 2011. After approval of the 2001 Plan, no additional
===============================================================================
grants will be made under the Company's 1994 Option Plan.
===============================================================================
The exercise price of Shares covered by the options will be the
===============================================================================
closing price of the Shares on the date of the grant, except that in the case
===============================================================================
of a grant of an incentive stock option to a holder of 10% or more of the
===============================================================================
Common Stock at the time of a grant, the price will be determined by the Board
===============================================================================
of Directors or an appropriate committee of the Board at not less than 110% of
===============================================================================
the closing price of the shares on the date of the grant.
===============================================================================
The 2001 Plan will be administered by a committee of one or more
===============================================================================
members of the Board of Directors appointed by the Board (the "Committee").
===============================================================================
The Committee will have the authority, in its discretion, to determine the
===============================================================================
persons to whom options shall be granted, the time when such persons shall be
===============================================================================
granted options, the number of shares of Common Stock that will be subject to
===============================================================================
each option, the purchase price of each share of Common Stock which shall be
===============================================================================
subject to each option, the period(s) during which such options shall be
===============================================================================
exercisable (in whole or in part), and any other terms or provisions of
===============================================================================
the options. Options may be granted to officers, directors and executive,
===============================================================================
managerial, professional, technical or administrative employees of, and
===============================================================================
consultants to, the Company, a subsidiary of the Company or a joint venture of
===============================================================================
the Company.
===============================================================================
Upon the exercise of an option under the 2001 Plan, the Company will
===============================================================================
cause the purchased Shares to be issued only when it has received the full
===============================================================================
purchase price for the Shares in cash or, where permitted by applicable law,
===============================================================================
delivery of Common Stock owned by the holder having a fair market value equal
===============================================================================
to the cash exercise price, according to procedures approved by the Committee.
===============================================================================
An option under the 2001 Plan may not be exercisable after the expiration of 10
===============================================================================
years from the date the option is granted (or in the case of an incentive stock
===============================================================================
option granted to a person who at the time the option is granted owns more than
===============================================================================
10% of the voting stock in the Company, the option may not be exercisable after
===============================================================================
the expiration of 5 years after the date of grant). The Committee has the right
===============================================================================
to accelerate in whole or in part, from time to time, conditionally or
===============================================================================
unconditionally, rights to exercise any option granted under the 2001 Plan.
===============================================================================
To the extent that an option is not exercised within the period of
===============================================================================
exercisablity, it will expire as to the then unexercised part.
===============================================================================
If a grantee is discharged (or the grantee's services are terminated)
===============================================================================
for cause, any option granted under the 2001 Plan will, unless otherwise
===============================================================================
specified by the Committee, forthwith terminate with respect to any unexercised
===============================================================================
portion thereof. For the purposes of the 2001 Plan, the term "for cause" means
===============================================================================
(a) with respect to an employee who is a party to a written employment
===============================================================================
agreement with, or, alternatively, participates in a benefit plan of the
===============================================================================
Company or a subsidiary of the Company, which agreement or plan contains a
===============================================================================
definition of "for cause" or "cause" (or words of like import) for purposes of
===============================================================================
termination of employment thereunder by the Company or such subsidiary
===============================================================================
corporation of the Company, "for cause" or "cause" as defined therein; or (b)
===============================================================================
in all other cases, (i) the willful commission by an employee of an act that
===============================================================================
causes or may cause substantial damage to the Company or a subsidiary
===============================================================================
corporation of the Company; (ii) the commission by an employee of an act of
===============================================================================
fraud in the performance of such employee's duties on behalf of the Company or
===============================================================================
a subsidiary corporation of the Company; (iii) conviction of the employee for
===============================================================================
commission of a felony in connection with the performance of his duties on
===============================================================================
behalf of the Company or a subsidiary corporation corporation of the Company,
===============================================================================
or (iv) the continuing failure of an employee to perform the duties of such
===============================================================================
employee to the Company or a subsidiary corporation corporation of the Company
===============================================================================
after written notice thereof and a reasonable opportunity to be heard and cure
===============================================================================
such failure are given to the employee by the Company.
===============================================================================
In general, if a grantee's employment with the Company is terminated
===============================================================================
(or the grantee's services are terminated) for cause, any unexercised options
===============================================================================
will expire immediately. If the grantee is dismissed for reasons other than
===============================================================================
cause, the grantee will have three months in which to exercise any remaining
===============================================================================
vested options under the 2001 Plan. In the event of the grantee's death before
===============================================================================
his employment with the Company is terminated, his estate or heir will have a
===============================================================================
year to exercise his vested options after his death. The Committee may modify
===============================================================================
these general rules in the specific terms of a grant.
===============================================================================
No option granted under the 2001 Plan will be transferable, whether by
===============================================================================
operation of law or otherwise, other than by will or descent and distribution,
===============================================================================
and any option granted under the 2001 Plan will be exercisable during the
===============================================================================
lifetime of the holder only by such holder, unless the Committee in the terms
===============================================================================
of the grant permits a transfer to an immediate family member or a trust for
===============================================================================
immediate family members.
===============================================================================
The number of Shares subject to the Plan and any option granted under
===============================================================================
the Plan may be adjusted by the Board of Directors to reflect changes in the
===============================================================================
capitalization of the Company. In the event of a "change of control" of the
===============================================================================
Company (acquisition by another entity of more than 50% of the combined voting
===============================================================================
power of all classes of stock of the Company normally entitled to vote the
===============================================================================
election of directors, approval by the Board of Directors of the sale of all or
===============================================================================
substantially all of the property or assets of the Company, or approval by the
===============================================================================
Board of Directors of the consolidation or merger of the Company with another
===============================================================================
corporation, the consummation of which will result in more than 50% of the total
===============================================================================
combined voting power of all classes of stock of the Company being acquired by
===============================================================================
another entity), then all outstanding options immediately become exercisable,
===============================================================================
and the exercise period may be extended.
===============================================================================
The Board of Directors may, from time to time, amend the 2001 Plan,
===============================================================================
provided that no amendment shall be made without the approval of the
===============================================================================
stockholders of the Company, that will (a) increase the total number of Shares
===============================================================================
reserved for options under the Plan (other than an increase resulting from an
===============================================================================
adjustment by reason of a change in the capitalization of the Company),
===============================================================================
(b) reduce the exercise price of any option, (c) modify the provisions of the
===============================================================================
Plan relating to eligibility, or (d) materially increase the benefits accruing
===============================================================================
to participants under the Plan. The Option Committee is authorized to amend
===============================================================================
the 2001 Plan and the options granted thereunder to permit the options granted
===============================================================================
thereunder to qualify as incentive stock options within the meaning of Section
===============================================================================
422 of the Code and the Treasury Regulations promulgated thereunder. The
===============================================================================
rights and obligations under any option granted before any such amendment may
===============================================================================
not be adversely affected by amendment of the 2001 Plan or the option without
===============================================================================
the consent of the holder of such option.
===============================================================================
25
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP as
independent public accountants for the Company for the fiscal
year ending September 30, 2001, subject to approval by the
stockholders. The Board of Directors recommends that such
appointment be ratified.
Representatives of Deloitte & Touche LLP will be present at the
meeting and will have the opportunity to make a statement, if
they desire to do so, and respond to appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those
stated above which are to be brought before the meeting.
However, if any such other matters should be presented for
consideration and voting, it is the intention of the persons
named in the proxy to vote on such matters in accordance with
their judgment.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals by stockholders intended to be presented at the 2002
annual meeting must be forwarded in writing and received at
the principal executive offices of the Company not later than
November 19, 2001, directed to the attention of the Secretary,
for consideration for inclusion in the Company's proxy
statement for the Annual Meeting of Stockholders to be held in
2002. Any such proposals must comply in all respects with the
rules and regulations of the Securities and Exchange
Commission.
OLIVER J. JANNEY
Secretary
January 29, 2001
26
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the
Board of Directors in fulfilling its oversight responsibilities by
reviewing: the financial reports and other financial information
provided by the Corporation to any governmental body or the
public; the Corporation's systems of internal controls regarding
finance, accounting, legal compliance and ethics that
management and the Board have established; and the
Corporation's auditing, accounting and financial reporting
processes generally. Consistent with this function the Audit
Committee should encourage continuous improvement of, and
should foster adherence to, the corporation's policies,
procedures and practices at all levels. The Audit Committee's
primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system
o Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department
o Provide an open avenue of communication among the
independent accountants, financial and senior management, the
internal auditing department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be
independent directors, and free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with
basic finance and accounting practices, and at least one
member of the Committee shall have accounting or related
financial management expertise. Committee members may
enhance their familiarity with finance and accounting by
A-1
participating in educational programs conducted by the
Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their
successors shall be duly elected and qualified. Unless a Chair is
elected by the full Board, the members of the Committee may
designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster
open communication, the Committee should meet at least
annually with management the director of the internal auditing
department and the independent accountants in separate
executive sessions to discuss any matters that the Committee
or each of these groups believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee
shall:
1. Review and update this Charter periodically, at least
annually, as conditions dictate.
2. Review the organization's annual financial statements and
any reports or other financial information submitted to any governmental body,
or the public, including any certification, report, opinion, or review rendered
by the independent accountants.
3. Review the regular internal reports to management prepared by
the internal auditing department and management's response.
4. Review with financial management and the independent
accountants the 10-Q prior to its filing or prior to the release of
earnings. The Chair of the Committee may represent the entire Committee for
purposes of this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and
A-2
effectiveness, and approve the fees and other compensation to be
paid to the independent accountants. On an annual basis, the
Committee should review and discuss with the accountants all
significant relationships the accountants have with the
Corporation to determine the accountants' independence.
6. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants when
circumstances warrant.
7. Periodically consult with the independent accountants out of
the presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the
internal auditors, review the integrity of the organization's financial
reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the
quality and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested by
the independent accountants, management, or the internal auditing department.
Process Improvement
11. Establish regular and separate systems of reporting to the
Audit Committee by each of Management, the independent accountants and the
internal auditors regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
12. Following completion of the annual audit, review separately
with each of management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management
and the independent accountants or the internal auditing department in
A-3
connection with the preparation of the financial statements.
14. Review with the independent accountants, the internal
auditing department and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit Committee,
have been implemented.
Ethical and Legal Compliance
15. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to enforce this
Code.
16. Review management's monitoring of the Corporation's
compliance with the organization's Ethical Code, and ensure that management has
the proper review system in place to ensure that Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
17. Review activities, organizational structure, and
qualifications of the internal audit department.
18. Review, with the organization's counsel, legal compliance
matters including corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter
that could have a significant impact on the organization's financial statements.
20. Perform any other activities consistent with this Charter,
the Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
A-4
EXHIBIT B
UNIROYAL TECHNOLOGY CORPORATION
2001 STOCK OPTION PLAN
Table of Contents
Page
ARTICLE I General 1
1.1 Purpose.........................................................................................1
1.2 Administration..................................................................................1
1.3 Persons Eligible for Awards.....................................................................1
1.4 Types of Awards Under Plan......................................................................2
1.5 Shares Available for Awards.....................................................................2
1.6 Definitions of Certain Terms....................................................................2
ARTICLE II Awards Under The Plan 3
2.1 Certificates Evidencing Awards..................................................................3
2.2 Grant of Stock Options and Dividend Equivalent Rights...........................................4
2.3 Exercise of Options.............................................................................5
2.4 No Stockholder Rights...........................................................................5
2.5 Termination of Employment; Death Subsequent to a Termination of Employment......................5
2.6 Transferability of Options .....................................................................6
ARTICLE III Miscellaneous 7
3.1 Amendment of the Plan; Modification of Awards...................................................7
3.2 Consent Requirement.............................................................................7
3.3 Nonassignability................................................................................7
3.4 Restriction on Issuance of Stock Pursuant to Awards.............................................7
3.5 Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code......................................................................8
3.6 Withholding Taxes...............................................................................8
3.7 Adjustment Upon Changes in Common Stock.........................................................8
3.8 Change in Control...............................................................................9
3.9 Limitations Imposed by Section 162(m)..........................................................10
3.10 Right of Discharge Reserved....................................................................10
3.11 Nature of Payments.............................................................................10
3.12 Non-Uniform Determinations.....................................................................10
3.13 Other Payments or Awards.......................................................................10
3.14 Headings.......................................................................................10
3.15 Effective Date and Term of Plan................................................................11
3.16 Governing Law..................................................................................11
2
UNIROYAL TECHNOLOGY CORPORATION
2001 STOCK OPTION PLAN
ARTICLE I
General
1.1 Purpose
The Uniroyal Technology Corporation 2001 Stock Option Plan (the "Plan")
is designed to provide certain key persons, on whose initiative and efforts the
successful conduct of the business of Uniroyal Technology Corporation (the
"Company") depends, and who are responsible for the management, growth and
protection of the business of the Company, with incentives to: (a) enter into
and remain in the service of the Company, a Company subsidiary or a Company
joint venture, (b) acquire a proprietary interest in the success of the Company,
(c) maximize their performance and (d) enhance the long-term performance of the
Company (whether directly or indirectly through enhancing the long-term
performance of a Company subsidiary or a Company joint venture).
1.2 Administration
(a) Administration by Committee; Constitution of Committee. The Plan
shall be administered by the Option Committee of the Board of Directors of the
Company (the "Board") or such other committee or subcommittee as the Board may
designate or as shall be formed by the abstention or recusal of a non-Qualified
Member (as defined below) of such committee (the "Committee"). The members of
the Committee shall be appointed by, and serve at the pleasure of, the Board.
Except as provided in the last sentence of this Section 1.2, at all times that
the Committee acts in connection with the Plan, the Committee shall consist
solely of Qualified Members, the number of whom shall not be less than two. A
"Qualified Member" is both a "non-employee director" within the meaning of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934 (the
"1934 Act") and an "outside director" within the meaning of section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Solely with respect
to the granting and administration of awards to persons who are not at the time
of the grant, and who are not expected to become, subject to the insider trading
restrictions of Section 16 of the 1934 Act or the limitation on deductible
compensation under Section 162(m) of the Code, the Committee may consist of a
single member of the Board, who need not be a Qualified Member.
(b) Committee's Authority. The Committee shall have the authority (i)
to exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any Grant Certificates given to grantees
pursuant to Section 2.1, (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules governing its own operations,
(iv) to make all determinations necessary or advisable in administering the
Plan, (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan, and (vi) to amend the Plan to reflect changes in
applicable law.
(c) Committee Action. Actions of the Committee shall be taken by
the vote of a majority of its members. Any action may be taken by a written
instrument signed by a majority of the Committee members, and action so taken
shall be fully as effective as if it had been taken by a vote at a meeting.
(d) Determinations Final. The determination of the Committee on
all matters relating to the Plan or any Grant Certificate shall be final,
binding and conclusive.
(e) Limit on Committee Members' Liability. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award thereunder.
1.3 Persons Eligible for Awards
The persons eligible to receive awards under the Plan are those
officers, directors, and executive, managerial, professional, technical or
administrative employees of, and consultants to, the Company, its subsidiaries
and its joint ventures (collectively, "key persons") as the Committee in its
sole discretion shall select. The Committee may from time to time in its sole
discretion determine that any key person shall be ineligible to receive awards
under the Plan.
-1 -
1.4 Types of Awards Under Plan
Awards may be made under the Plan in the form of (a) incentive stock
options, (b) non-qualified stock options, and (c) dividend equivalent rights,
all as more fully set forth in Article II. The term "award" means any of the
foregoing. No incentive stock option may be granted to a person who is not an
employee of the Company on the date of grant.
1.5 Shares Available for Awards
(a) Aggregate Number Available. The total number of shares of common
stock of the Company ("Common Stock") with respect to which awards may be
granted pursuant to the Plan shall not exceed 5,000,000 shares. Shares issued
pursuant to the Plan may be authorized but unissued Common Stock, authorized and
issued Common Stock held in the Company's treasury or Common Stock acquired by
the Company for the purposes of the Plan.
(b) Adjustment Upon Changes in Common Stock. Upon certain changes in
Common Stock, the number of shares of Common Stock available for issuance with
respect to awards that may be granted under the Plan pursuant to Section 1.5(a)
shall be adjusted pursuant to Section 3.7(a).
(c) Certain Shares to Become Available Again. Any shares of Common
Stock that are subject to an award under the Plan and that remain unissued upon
the cancellation or termination of such award for any reason whatsoever shall
again become available for awards under the Plan.
(d) Individual Limit. Except for the limits set forth in this Section
1.5(d) and in Section 2.2(g), no provision of this Plan shall be deemed to limit
the number or value of shares with respect to which the Committee may make
awards to any eligible person. Subject to adjustment as provided in Section
3.7(a), the total number of shares of Common Stock with respect to which awards
may be granted to any one employee of the Company or a subsidiary during any one
calendar year shall not exceed 500,000 shares. Stock options granted and
subsequently canceled or deemed to be canceled in a fiscal year count against
this limit even after their cancellation
1.6 Definitions of Certain Terms
(a) The "Fair Market Value" of a share of Common Stock on any day shall
be the closing quotation at which such shares are sold on a national securities
exchange in the United States. In the event that the shares are listed on a
national securities exchange in the United States on such date but the shares
are not traded on such date, or such national securities exchange is not open
for business on such date, the fair market value per share shall be determined
as of the closest preceding date on which such exchange shall have been open for
business and the shares were traded. If the shares are listed on more than one
national securities exchange in the United States on such date, the Committee
shall determine which national securities exchange shall be used for the purpose
of determining the fair market value per share. If on such date a public market
exists for the shares but such shares are not listed on a national securities
exchange in the United States, the fair market value per share shall be the
closing price reported by the Nasdaq National Market (or its successor quotation
system). In the event that there is no closing price reported by the Nasdaq
National Market (or its successor quotation system) for shares on such date, the
fair market value per share shall be the closing price reported by the Nasdaq
National Market (or its successor quotation system) for shares on the closest
date preceding such date for which such quotations are available. If on such
date no public market exists for shares, the fair market value per share shall
be determined by such other reasonable valuation method as the Committee shall,
in its discretion, select and apply in good faith. For all purposes of this
Plan, the fair market value per share shall be determined subject to Section
422(c)(7) of the Code. In no event shall the fair market value of any share of
Common Stock be less than its par value.
(b) The term "incentive stock option" means an option that is intended
to qualify for special federal income tax treatment pursuant to sections 421 and
422 of the Code as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Grant Certificate. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a "non-qualified stock option."
(c) A grantee shall be deemed to have a "termination of employment"
upon (i) the date the grantee ceases to be employed by, or to provide consulting
services for, the Company, any Company subsidiary or Company joint venture, or
any corporation (or any of its subsidiaries) which assumes the grantee's award
in a transaction to which section 424(a) of the Code applies; (ii) the date the
grantee ceases to be a Board member; or (iii) in the case of a grantee
-2 -
who is, at the time of reference, both an employee or consultant and a Board
member, the later of the dates determined pursuant to clauses (i) and (ii)
above. For purposes of clause (i) above, a grantee who continues his employment
or consulting relationship with: (A) a Company subsidiary subsequent to its sale
by the Company, or (B) a Company joint venture subsequent to the Company's sale
of its interests in such joint venture, shall have a termination of employment
upon the date of such sale. The Committee may in its discretion determine
whether any leave of absence constitutes a termination of employment for
purposes of the Plan and the impact, if any, of any such leave of absence on
awards theretofore made under the Plan. Such determinations of the Committee
shall be final, binding and conclusive. A person who changes from one company
status (employee, consultant or director) to another without interruption shall
not be considered to have had a termination of employment by reason of such
change, except for purposes of Section 2.5(e).
(d) The terms "parent corporation" and "subsidiary corporation" shall
have the meanings given them in section 424(e) and (f) of the Code,
respectively.
(e) The term "employment" shall be deemed to mean an employee's
employment with, or a consultant's provision of services to, the Company, any
Company subsidiary or any Company joint venture and each director's service as a
director.
(f) The term "cause" in connection with a termination of
employment by reason of a dismissal for cause shall mean:
(i) to the extent that there is an employment, severance or
other agreement or a benefit plan governing the relationship
between the grantee and the Company, a Company subsidiary or a
Company joint venture, which agreement or plan contains a
definition of "cause," cause shall consist of those acts or
omissions that would constitute "cause" under such agreement or
plan; and otherwise,
(ii) the grantee's termination of employment by the
Company or Company subsidiary or joint venture on account of any
one or more of the following:
(A) the willful commission by the grantee of an act that
causes or may cause substantial damage to the Company or a
Company subsidiary or joint venture;
(B) the commission by the grantee of an act of fraud in the
performance of such grantee's duties on behalf of the Company
or a subsidiary or joint venture of the Company;
(C) conviction of the grantee for commission of a felony in
connection with the performance of his duties on behalf of the
Company or a subsidiary or joint venture of the Company, or
(D) the continuing failure of grantee to perform the duties
of such grantee to the Company or a subsidiary or joint
venture of the Company after written notice thereof and a
reasonable opportunity to be heard and cure such failure are
given to the grantee by the Committee.
Any rights the Company may have hereunder in respect of the events
giving rise to cause shall be in addition to the rights the Company may have
under any other agreement with a grantee or at law or in equity. Any
determination of whether a grantee's employment is (or is deemed to have been)
terminated for cause shall be made by the Committee in its discretion, which
determination shall be final, binding and conclusive on all parties. If,
subsequent to a grantee's voluntary termination of employment or involuntary
termination of employment without cause, it is discovered that the grantee's
employment could have been terminated for cause, the Committee may deem such
grantee's employment to have been terminated for cause. A grantee's termination
of employment for cause shall be effective as of the date of the occurrence of
the event giving rise to cause, regardless of when the determination of cause is
made.
ARTICLE II
Awards Under The Plan
2.1 Certificates Evidencing Awards
Each award granted under the Plan shall be evidenced by a written
certificate ("Grant Certificate") which shall contain such provisions as the
Committee may in its sole discretion deem necessary or desirable. By accepting
an award pursuant to the Plan, a grantee thereby agrees that the award
-3 -
shall be subject to all of the terms and provisions of the Plan and the
applicable Grant Certificate. The Grant Certificate shall specify whether the
option is intended to be an incentive stock option.
2.2 Grant of Stock Options and Dividend Equivalent Rights
(a) Stock Option Grants. The Committee may grant incentive stock
options and non-qualified stock options (collectively, "options") to purchase
shares of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion, subject
to the provisions of the Plan.
(b) Option Exercise Price. Each Grant Certificate with respect to an
option shall set forth the amount (the "option exercise price") payable by the
grantee to the Company upon exercise of the option evidenced thereby. The option
exercise price per share shall be determined by the Committee in its sole
discretion; provided, however, that the option exercise price of an incentive
stock option shall be at least 100% of the Fair Market Value of a share of
Common Stock on the date the option is granted, and provided further that in no
event shall the option exercise price be less than the par value of a share of
Common Stock.
(c) Exercise Period. Each Grant Certificate with respect to an option
shall set forth the periods during which the award evidenced thereby shall be
exercisable, whether in whole or in part. Such periods shall be determined by
the Committee in its sole discretion; provided, however, that no incentive stock
option shall be exercisable more than 10 years after the date of grant, and
provided further that, except as and to the extent that the Committee may
otherwise provide, no option shall be exercisable prior to the first anniversary
of the date of grant.
(d) Reload Options. The Committee may in its sole discretion include in
any Grant Certificate with respect to an option (the "original option") a
provision that an additional option (the "reload option") shall be granted to
any grantee who, pursuant to Section 2.3(e)(ii), delivers shares of Common Stock
in partial or full payment of the exercise price of the original option. The
reload option shall be for a number of shares of Common Stock equal to the
number thus delivered, shall have an exercise price equal to the Fair Market
Value of a share of Common Stock on the date of exercise of the original option,
and shall have an expiration date not later than the expiration date of the
original option. In the event that a Grant Certificate provides for the grant of
a reload option, such Certificate shall also provide that the exercise price of
the original option be not less than the Fair Market Value of a share of Common
Stock on its date of grant, and that any shares that are delivered pursuant to
Section 2.3 (e) (ii) in payment of such exercise price shall have been held for
at least six months.
(e) Dividend Equivalent Rights. The Committee may in its sole
discretion include in any Grant Certificate with respect to an option a dividend
equivalent right entitling the grantee to receive amounts equal to the ordinary
dividends that would be paid, during the time such award is outstanding and
unexercised, on the shares of Common Stock covered by such award if such shares
were then outstanding. In the event such a provision is included in a Grant
Certificate, the Committee shall determine whether such payments shall be made
in cash or in shares of Common Stock, whether they shall be conditioned upon the
exercise of the award to which they relate, the time or times at which they
shall be made, and such other vesting and forfeiture provisions and other terms
and conditions as the Committee shall deem appropriate. Notwithstanding the
foregoing, no dividend equivalent rights shall be conditioned on the exercise of
any option if and to the extent that such dividend equivalent right would cause
the compensation represented by such option not to constitute performance-based
compensation under section 162(m) of the Code.
(f) Incentive Stock Option Limitation: Exercisability. To the
extent that the aggregate Fair Market Value (determined as of the time the
option is granted) of the stock with respect to which incentive stock options
are first exercisable by any employee during any calendar year shall exceed
$100,000, or such higher amount as may be permitted from time to time under
section 422 of the Code, such options shall be treated as non-qualified stock
options.
(g) Incentive Stock Option Limitation: 10% Owners. Notwithstanding the
provisions of paragraphs (b) and (c) of this Section 2.2, an incentive stock
option may not be granted under the Plan to an individual who, at the time the
option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of his employer corporation or of its
parent or subsidiary corporations (as such ownership may be determined for
purposes of section 422(b) (6) of the Code) unless (i) at the time such
incentive stock option is granted the option exercise price is at least 110% of
the Fair Market Value of the shares subject thereto and (ii) the incentive stock
option by its terms is not exercisable after the expiration of 5 years from the
date it is granted.
-4 -
2.3 Exercise of Options
Subject to the other provisions of this Article II, including Section
2.5, each option granted under the Plan shall be exercisable as follows:
(a) Vesting Period. Unless the applicable Grant Certificate otherwise
provides, an option shall vest and become exercisable in equal installments of
20% of the shares subject to such option; one installment shall become vested
and exercisable on each successive anniversary of the date of grant.
(b) End of Exercise Period. Unless the applicable Grant Certificate
otherwise provides, once an installment becomes vested and exercisable, it shall
remain exercisable until the earlier of (i) the tenth anniversary of the date of
grant of the award or (ii) the expiration, cancellation or termination of the
award.
(c) Timing and Extent of Exercise. Unless the applicable Grant
Certificate otherwise provides, an option may be exercised from time to time as
to all or part of the shares as to which such award is then exercisable.
(d) Notice of Exercise. An option shall be exercised by the filing of a
written notice with the Company or the Company's designated exchange agent (the
"exchange agent"), on such form and in such manner as the Committee shall in its
sole discretion prescribe.
(e) Payment of Exercise Price. Any written notice of exercise of an
option shall be accompanied by payment for the shares being purchased. Such
payment shall be made: (i) by certified or official bank check (or the
equivalent thereof acceptable to the Company or its exchange agent) for the full
option exercise price; or (ii) subject to rules or policies established by the
Committee or its designee, by delivery of shares of Common Stock having a Fair
Market Value (determined as of the exercise date) equal to all or part of the
option exercise price and a certified or official bank check (or the equivalent
thereof acceptable to the Company or its exchange agent) for any remaining
portion of the full option exercise price; (iii) by delivering to the Company
authorization for the immediate sale of the shares of the Common Stock that will
be purchased by exercise of the option and retention by Company of such sale or
liquidation proceeds (accompanied by all requisite authorizations as the
Committee or its designee deems necessary) with respect to such numbers of
shares having a fair market value equal to the cash exercise price applicable to
that portion of the option being exercised by the grantee, the Fair Market Value
of shares to be so purchased and sold to be determined as of the date
immediately preceding the date on which the option is exercised or (iv) at the
discretion of the Committee and to the extent permitted by law, by such other
provision as the Committee may from time to time prescribe (whether directly or
indirectly through the exchange agent).
(f) Delivery of Certificates Upon Exercise. Promptly after receiving
payment of the full option exercise price, the Company or its exchange agent
shall, subject to the provisions of Section 3.2, deliver to the grantee or to
such other person as may then have the right to exercise the award, a
certificate or certificates for the shares of Common Stock for which the award
has been exercised. If the method of payment employed upon option exercise so
requires, and if applicable law permits, an optionee may direct the Company, or
its exchange agent as the case may be, to deliver the stock certificate(s) to
the optionee's stockbroker.
2.4 No Stockholder Rights.
No grantee of an option (or other person having the right to exercise
such award) shall have any of the rights of a stockholder of the Company
with respect to shares subject to such award until the issuance of a stock
certificate to such person for such shares. Except as otherwise provided in
Section 1.5(b), no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash,
securities or other property) for which the record date is prior to the
date such stock certificate is issued.
2.5 Termination of Employment; Death Subsequent to a Termination
of Employment
(a) General Rule. Except to the extent otherwise provided herein or by
the terms of an Award Certificate, a grantee who incurs a termination of
employment may exercise any outstanding option on the following terms and
conditions: (i) exercise may be made only to the extent that the award was
vested (and grantee was entitled to exercise the award) on the date of
termination of employment; and (ii) exercise must occur not later than the date
of termination of employment but in no event after the original expiration date
of the award.
(b) Dismissal or Resignation. If a grantee incurs a termination of
employment as the result of resignation or a dismissal for cause, all options
not theretofore exercised shall terminate upon the grantee's termination of
employment. It a grantee incurs a termination of employment other than for cause
or by resignation, then any outstanding option shall be exercisable on the
following terms and conditions: (i) ) exercise may be made only to the
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extent that the award was vested (and grantee was entitled to exercise the
award) on the date of such termination of employment; and (ii) exercise must
occur by three months from the date of termination of employment.
(c) Disability. If a grantee incurs a termination of employment by
reason of a disability (as defined below), then any outstanding option shall be
exercisable on the following terms and conditions: (i) exercise may be made only
to the extent that the award was vested (and grantee was entitled to exercise
the award) on the date of such termination of employment; and (ii) exercise must
occur by the earlier of (A) the first anniversary of the grantee's termination
of employment, or (B) the original expiration date of the award. For this
purpose "disability" shall mean: (x) except in connection with an incentive
stock option, any physical or mental condition that would qualify a grantee for
a disability benefit under the long-term disability plan maintained by the
Company or, if there is no such plan, a physical or mental condition that
prevents the grantee from performing the essential functions of the grantee's
position (with or without reasonable accommodation) for a period of six
consecutive months and (y) in connection with an incentive stock option, a
disability described in section 422(c)(6) of the Code. The existence of a
disability shall be determined by the Committee in its absolute discretion.
(d) Death.
(i) Termination of Employment as a Result of Grantee's Death. If
a grantee incurs a termination of employment as the result of the
grantee's death, then any outstanding option shall be exercisable
on the following terms and conditions: (A) exercise may be made
only to the extent that the award was vested (and grantee was
entitled to exercise the award) on the date of such termination of
employment; and (B) exercise must occur by the earlier of (1) the
first anniversary of the grantee's termination of employment, or
(2) the original expiration date of the award.
(ii) Death Subsequent to a Termination of Employment. If a
grantee dies subsequent to incurring a termination of employment
but prior to the expiration of the exercise period with respect to
a non-qualified stock option, then the award shall remain
exercisable until the earlier to occur of (A) the first anniversary
of the grantee's date of death or (B) the original expiration date
of the award.
(iii) Restrictions on Exercise Following Death. Any such
exercise of an award following a grantee's death shall be made only
by the grantee's executor or administrator or other duly appointed
representative reasonably acceptable to the Committee, unless the
grantee's will specifically disposes of such award, in which case
such exercise shall be made only by the recipient of such specific
disposition. If a grantee's personal representative or the
recipient of a specific disposition under the grantee's will shall
be entitled to exercise any award pursuant to the preceding
sentence, such representative or recipient shall be bound by all
the terms and conditions of the Plan and the applicable Grant
Certificate which would have applied to the grantee.
(e) Special Rules for Incentive Stock Options. No option that remains
exercisable for more than three months following a grantee's termination of
employment for any reason other than death or disability, or for more than one
year following a grantee's termination of employment as the result of the
grantee's becoming disabled, may be treated as an incentive stock option.
(f) Committee Discretion. The Committee, in the applicable Grant
Certificate, may waive or modify the application of the foregoing provisions of
this Section 2.5 (other than subsection (e) above).
2.6 Transferability of Options
Except as otherwise provided in an applicable Grant Certificate
evidencing an option, during the lifetime of a grantee, each option granted to a
grantee shall be exercisable only by the grantee and no option shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable Grant Certificate evidencing
an option (other than an incentive stock option to the extent inconsistent with
the requirements of section 422 of the Code applicable to incentive stock
options), permit a grantee to transfer all or some of the options to (A) the
grantee's spouse, children or grandchildren ("Immediate Family Members"), (B) a
trust or trusts for the exclusive benefit of such Immediate Family Members, or
(C) other parties approved by the Committee in its absolute discretion.
Following any such transfer, any transferred options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
the transfer.
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ARTICLE III
Miscellaneous
3.1 Amendment of the Plan; Modification of Awards
(a) Amendment of the Plan. The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee's death, the person having the right to
exercise the award). For purposes of this Section 3.1, any action of the Board
or the Committee that in any way alters or affects the tax treatment of any
award shall not be considered to materially impair any rights of any grantee.
(b) Stockholder Approval Requirement. Stockholder approval shall be
required with respect to any amendment to the Plan which (i) increases the
aggregate number of shares which may be issued pursuant to incentive stock
options or changes the class of employees eligible to receive such options; or
(ii) materially increases the benefits under the Plan to persons whose
transactions in Common Stock are subject to section 16(b) of the 1934 Act or
increases the benefits under the Plan to someone who is, or who is anticipated
to be a "162(m) covered employee" (as defined in Section 3.9), materially
increases the number of shares which may be issued to such persons, or
materially modifies the eligibility requirements affecting such persons.
(c) Modification of Awards. The Committee may cancel any award under
the Plan. The Committee also may amend any outstanding Grant Certificate,
including, without limitation, by amendment which would: (i) accelerate the time
or times at which the award becomes unrestricted or may be exercised; (ii) waive
or amend any goals, restrictions or conditions set forth in the Agreement; or
(iii) waive or amend the operation of Section 2.5 with respect to the
termination of the award upon termination of employment. However, any such
cancellation or amendment (other than an amendment pursuant to Sections 3.7 or
3.8) that materially impairs the rights or materially increases the obligations
of a grantee under an outstanding award shall be made only with the consent of
the grantee (or, upon the grantee's death, the person having the right to
exercise the award).
3.2 Consent Requirement
(a) No Plan Action without Required Consent. If the Committee shall at
any time determine that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the granting of any award
under the Plan, the issuance or purchase of shares or other rights thereunder,
or the taking of any other action thereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
3.3 Nonassignability
Except as provided in Section 2.5(d) and Section 2.6 no award or right
granted to any person under the Plan or under any Grant Certificate shall be
assignable or transferable other than by will or by the laws of descent and
distribution, and (b) all rights granted under the Plan or any Grant Certificate
shall be exercisable during the life of the grantee only by the grantee or the
grantee's legal representative.
3.4 Restriction on Issuance of Stock Pursuant to Awards
The Company shall not permit any shares of Common Stock to be issued
pursuant to Awards granted under the Plan unless such shares of Common Stock are
fully paid and non-assessable under applicable law.
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3.5 Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code
Each Grant Certificate with respect to an incentive stock option shall
require the grantee to notify the Company of any disposition of shares of
Common Stock issued pursuant to the exercise of such option under the
circumstances described in section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.
3.6 Withholding Taxes
Whenever shares of Common Stock are to be delivered pursuant to an
award under the Plan, the Company shall be entitled to require as a condition of
delivery that the grantee remit to the Company an amount sufficient in the
opinion of the Company to satisfy all federal, state and other governmental tax
withholding requirements related thereto. With the approval of the Committee,
which the Committee shall have sole discretion whether or not to give, the
grantee may satisfy the foregoing condition by electing to have the Company
withhold from delivery shares having a value equal to the amount of tax to be
withheld. Such shares shall be valued at their Fair Market Value as of the date
on which the amount of tax to be withheld is determined. Fractional share
amounts shall be settled in cash. Such a withholding election may be made with
respect to all or any portion of the shares to be delivered pursuant to an
award.
3.7 Adjustment Upon Changes in Common Stock
(a) Shares Available for Grants. In the event of any change in the
number of shares of Common Stock outstanding by reason of any stock dividend or
split, reverse stock split, recapitalization, merger, consolidation, combination
or exchange of shares or similar corporate change, the maximum number of shares
of Common Stock with respect to which the Committee may grant awards under
Article II hereof, as described in Section 1.5(a), and the individual annual
limit described in Section 1.5(d), shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Common
Stock with respect to which awards: (i) may be granted under Article II hereof
and (ii) granted to any one employee of the Company or a subsidiary during any
one calendar year, in each case as the Committee may deem appropriate, unless
such adjustment would cause any award that would otherwise qualify as
performance based compensation with respect to a "162(m) covered employee" (as
defined in Section 3.9), to cease to so qualify.
(b) Outstanding Options and Dividend Equivalent Rights -- Increase or
Decrease in Issued Shares Without Consideration. Subject to any required action
by the stockholders of the Company, in the event of any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company,
the Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option, and the exercise price-per-share of Common
Stock of each such option and the number of any related dividend equivalent
rights.
(c) Outstanding Options and Dividend Equivalent Rights -- Certain
Mergers. Subject to any required action by the stockholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
option and dividend equivalent right outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such option or dividend equivalent
right would have received in such merger or consolidation.
(d) Outstanding Options and Dividend Equivalent Rights -- Certain Other
Transactions. In the event of (i) a dissolution or liquidation of the Company,
(ii) a sale of all or substantially all of the Company's assets, (iii) a merger
or consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Common Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:
(A) cancel, effective immediately prior to the
occurrence of such event, each option (including each dividend
equivalent right related thereto) outstanding immediately
prior to such event (whether or not then exercisable), and, in
full consideration of such cancellation, pay to the grantee to
whom such option was granted an amount in cash, for each share
of Common Stock subject to such option, respectively, equal to
the excess of (x) the value, as determined by the Committee in
its absolute discretion, of the property (including cash)
received by
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the holder of a share of Common Stock as a result of such
event over (y) the exercise price of such option; or
(B) provide for the exchange of each option
(including any related dividend equivalent right) outstanding
immediately prior to such event (whether or not then
exercisable) for an option on and dividend equivalent right
with respect to, as appropriate, some or all of the property
which a holder of the number of shares of Common Stock subject
to such option would have received and, incident thereto, make
an equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option, or
the number of shares or amount of property subject to the
option or dividend equivalent right or, if appropriate,
provide for a cash payment to the grantee to whom such option
was granted in partial consideration for the exchange of the
option.
(e) Outstanding Options and Dividend Equivalent Rights -- Other
Changes. In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Sections 3.7(b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to options and dividend
equivalent rights outstanding on the date on which such change occurs and in the
per-share exercise price of each such option as the Committee may consider
appropriate to prevent dilution or enlargement of rights. In addition, if and to
the extent the Committee determines it is appropriate, the Committee may elect
to cancel each option (including each dividend equivalent right related thereto)
outstanding immediately prior to such event (whether or not then exercisable),
and, in full consideration of such cancellation, pay to the grantee to whom such
option was granted an amount in cash, for each share of Common Stock subject to
such option, respectively, equal to the excess of (i) the Fair Market Value of
Common Stock on the date of such cancellation over (ii) the exercise price of
such option.
(f) No Other Rights. Except as expressly provided in the Plan, no
grantee shall have any rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an award or the
exercise price of any option.
3.8 Change in Control
(a) Change in Control Defined. For purposes of this Section 3.8, a
"Change in Control" shall be deemed to have occurred if (a) more than fifty
percent (50%) of the total combined voting power of all classes of stock of the
Company normally entitled to vote for the election of directors of the Company
is acquired by another person, firm or corporation or by a cooperating group of
such individuals or entities, (b) the Board approves the sale of all or
substantially all of the property or assets of the Company, or (c) the Board
approves a consolidation or merger of the Company with another corporation, the
consummation of which would result in the occurrence of an event described in
clause (a) above.
(b) Effect of a Change in Control. Upon the occurrence of a
Change in Control:
(i) notwithstanding any other provision of this Plan, any award
then outstanding shall become fully vested and immediately
exercisable; and
(ii) a grantee who incurs a termination of employment for any
reason, other than a dismissal for cause, concurrent with or within
one year following the Change in Control may exercise any
outstanding option, but only to the extent that the award was
vested (and grantee was entitled to exercise the award) on date of
the termination of the grantee's employment, whether by the terms
of the award or by operation of Section 3.8(b)(i) above, until the
earlier of (A) the original expiration date of the award and (B)
the later of (x) the date provided for under the terms of Section
2.5 without reference to this Section 3.8(b)(ii) and (y) the first
anniversary of the grantee's termination of employment.
Notwithstanding the foregoing, the Committee, in its discretion, may
determine that, upon the occurrence of a transaction described in Section
3.8(a), each option outstanding hereunder shall terminate within a specified
number of days after notice to the holder, and such holder shall receive, with
respect to each share subject to such option, an amount equal to the excess of
the fair market value of such shares immediately prior to the occurrence of such
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transaction over the exercise price per share of such option; such amount shall
be payable in cash, in one or more of the kinds of property payable in such
transaction, or in a combination thereof, as the Committee in its discretion
shall determine.
3.9 Limitations Imposed by Section 162(m)
Notwithstanding any other provision hereunder, prior to a Change in
Control, if and to the extent that the Committee determines the Company's
federal tax deduction in respect of an award may be limited as a result of
section 162(m) of the Code, the Committee may delay the exercise or payment, as
the case may be, in respect of options or dividend equivalent rights until a
date that is within 30 days after the earlier to occur of (i) the date that
compensation paid to the grantee no longer is subject to the deduction
limitation under section 162(m) of the Code and (ii) the occurrence of a Change
in Control. In the event that a grantee exercises an option or would receive a
payment in respect of a dividend equivalent right at a time when the grantee is
a 162(m) covered employee, and the Committee determines to delay the exercise or
payment, as the case may be, in respect of any such award, the Committee shall
credit cash or, in the case of an amount payable in Common Stock, the Fair
Market Value of the Common Stock, payable to the grantee to a book account. The
grantee shall have no rights in respect of such book account and the amount
credited thereto shall not be transferable by the grantee other than by will or
laws of descent and distribution. The Committee may credit additional amounts to
such book account as it may determine in its sole discretion. Any book account
created hereunder shall represent only an unfunded, unsecured promise by the
Company to pay the amount credited thereto to the grantee in the future. An
individual is a "162(m) covered employee" if, as of the last day of the
Company's taxable year for which the compensation related to an award would
otherwise be deductible (without regard to section 162(m)), he or she is (A) the
chief executive officer of the Company (or is acting in such capacity) or (B)
one of the four highest compensated officers of the Company other than the chief
executive officer. Whether an individual is described in either clause (A) or
(B) above shall be determined in accordance with applicable regulations under
section 162(m) of the Code.
3.10 Right of Discharge Reserved
Nothing in the Plan or in any Grant Certificate shall confer upon any
grantee the right to continue his or her employment or affect any right which
the Company may have to terminate such employment.
3.11 Nature of Payments
(a) Consideration for Services Performed. Any and all grants of
awards and issuances of shares of Common Stock under the Plan shall be in
consideration of services performed for the Company by the grantee.
(b) Not Taken into Account for Benefits. All such grants and issuances
shall constitute a special incentive payment to the grantee and shall not be
taken into account in computing the amount of salary or compensation of the
grantee for the purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other benefit plan of the
Company or under any agreement between the Company and the grantee, unless such
plan or agreement specifically otherwise provides.
3.12 Non-Uniform Determinations
The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or who are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Grant Certificates,
as to (a) the persons to receive awards under the Plan, (b) the terms and
provisions of awards under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6(c).
3.13 Other Payments or Awards
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
3.14 Headings
Any section, subsection, paragraph or other subdivision headings
contained herein are for the purpose of
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convenience only and are not intended to expand, limit or otherwise define the
contents of such subdivisions.
3.15 Effective Date and Term of Plan
(a) Adoption; Stockholder Approval. The Plan was adopted by the
Board on January 26, 2001, subject to approval by the Company's stockholders.
All awards under the Plan prior to such stockholder approval are subject in
their entirety to such approval. If such approval is not obtained prior to
the first anniversary of the date of adoption of the Plan, the Plan and all
awards thereunder shall terminate on that date.
(b) Termination of Plan. Unless sooner terminated by the Board or
pursuant to Paragraph (a) above, the provisions of the Plan respecting the grant
of incentive stock options shall terminate on the tenth anniversary of the
adoption of the Plan by the Board, and no incentive stock option awards shall
thereafter be made under the Plan. All such awards made under the Plan prior to
its termination shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan and the
applicable Grant Certificates.
3.16 Governing Law
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of laws.
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